The Third Circuit Court of Appeals will decide whether states can force cannabis companies to sign labor deals with unions as a condition of doing business, which is a question that could reshape licensing rules in half a dozen states.
Curaleaf sued the State of New Jersey and its Cannabis Regulatory Commission (CRC) in federal court on Oct. 9, 2025 over the Garden State’s requirement that licensed cannabis operators obtain a labor peace agreement (LPA) with a legitimate union as part of the licensing approval process.
LPAs are agreements between unions and companies that stipulate management will not interfere in union organizing activity among employees, while unions agree to not strike or picket. LPAs do not automatically unionize work forces, but they do ease the pathway towards them.
Both parties in the case requested that the court makes its previously order a final judgment, essentially ending the case in the U.S. District Court.
“Given that the parties have had an opportunity to submit any relevant facts and legal briefing previously, the Court has already considered those facts and ruled on the legal issues in the Opinion, and no further factual development is necessary, the parties agree that the Court may convert its prior ruling in the Opinion into a final judgment,” wrote both parties in a July 20 letter to the judge.
Earlier in the case, Curaleaf filed a motion to halt New Jersey’s enforcement of the rule through a preliminary injunction, while the state filed a motion to dismiss the case. Shipp denied both motions in a May 27 opinion from U.S. District Judge Michael Shipp.
Curaleaf argued that New Jersey’s LPA requirements conflict with rights the company has under the federal National Labor Relations Act, while New Jersey argued that the federal labor law should not apply given that cannabis is federally illegal.
The judge was not convinced by the state’s argument.
“This matter does not involve a contract ‘that contemplates distribution of a controlled substance in violation of federal law,’ and instead concerns whether a labor requirement (the LPA) is preempted by federal labor law,” wrote Shipp in the May 27, 2026 opinion. “The court will not accept Defendants’ invitation to stretch the limitations of the doctrine of unclean hands under Third Circuit precedent.”
Shipp also found that Curaleaf was likely to succeed on the merits of its claims against the labor law, but stopped short of issuing an injunction, because Curaleaf’s claims that the LPA law would cause immediate, irreparable harm, which is a standard for injunctions, as the company waited for weeks after its LPA contract expired before filing suit.
With the federal case out of the way, the parties will now be able to spar in the Third Circuit Court of Appeals. The State of New Jersey filed an appeal to the higher court on Aug. 13, 2026, which was accepted, making that court the most significant one to weigh the legality of LPA requirements for cannabis.
LPAs were originally popularized in San Francisco in the late 1990s as conditions for development projects from the hospitality industry, such as large hotels. Since then similar requirements have spread to licensing in other industries, especially legal cannabis.
Curaleaf versus New Jersey
Curaleaf has clashed with New Jersey regulators for years. The state’s CRC denied license renewals for two of the company’s three New Jersey facilities, after the company was alleged, by the CRC, to have engaged in unfair labor practices and its opposition to a union organizing effort from UFCW Local 360.
Ten days later, the CRC renewed the license, with some stipulations in place, which included a demand that the company work with the local union.
The CRC would go on to penalize the company on Aug. 7, 2025, for continuing to operate with an expired LPA in place for 122 days. Two months later, Curaleaf sued the CRC and the state in the U.S.District Court of New Jersey on Oct. 9.
The final ruling from the court allowed the parties to move onto the Third Circuit Court of Appeals, where a ruling on LPA requirements could have major implications on other states that still have them in effect.
California, New York, Connecticut and Rhode Island each have their own versions of LPA requirements.
Oregon previously had a similar requirements, until a 2025 ruling from a federal court in Oregon deemed the state’s LPA law unconstitutional. Much like in the New Jersey case, the court found that the National Labor Relations Act preempted the state law.
Thus far, other legal challenges in California and New York have not been as successful.
At the same time, some unions sprang up to assist cannabis companies comply with LPA requirements.
Dozens of companies in California signed with Professional Technical Union, Local 33 (Pro-Tech 33) when the state began requiring LPAs. The state eventually determined that Pro-Tech 33 was not a legitimate union, and those companies were required to sign agreements with new unions.
California would go on to rule out several other unions for not being “bona fide.”
On the East Coast, The Cannabis Engineers, Extractors, and Distributors Local 420 (CEED Local 420) raised some concerns from established unions who suspected they were created to assist cannabis companies meet LPA requirements.
So far, CEED Local 420 has signed a single collective bargaining agreement, with the workers at Ascend Wellness in Montclair, New Jersey. The union also signed several LPAs with operators in New York, who claimed their license renewals were blocked by regulators as a result of those agreements.
